Can a modern corporation thrive in a capitalistic world and be profitable while doing the right thing, even if it means that short-term profits are not always the first goal? I believe that Toyota’s biggest contribution to the corporate world is that of providing a real-life example that this is possible.
Throughout my visits to Toyota in Japan and the United States, in engineering, purchasing, and manufacturing, one theme stands out. Every person I have talked with has a sense of purpose greater than earning a paycheck. They feel a greater sense of mission for the company and can distinguish right from wrong with regard to that mission. They have learned the Toyota Way from their Japanese sensei (mentors) and the message is consistent: Do the right thing for the company, its employees, the customer, and society as a whole. Toyota’s strong sense of mission and commitment to its customers, employees, and society is the foundation for all the other principles and the missing ingredient in most companies trying to emulate Toyota.
When I interviewed Toyota executives and managers for this article, I asked them why Toyota existed as a business. The responses were remarkably consistent. For example, Jim Press, Executive Vice President and C.O.O. of Toyota Motor Sales in North America and one of two American Managing Directors of Toyota, explained:
The purpose of the money we make is not for us as a company to gain, and it’s not for us as associates to see our stock portfolio grow or anything like that. The purpose is so we can reinvest in the future, so we can continue to do this. That’s the purpose of our investment. And to help society and to help the community, and to contribute back to the community that we’re fortunate enough to do business in. I’ve got a trillion examples of that.
This is not to say that Toyota does not care about cutting costs. Shortly after World War II, Toyota nearly went bankrupt, which led to the resignation of the company founder—Kiichiro Toyoda. Toyota pledged to become debt-free. Cost reduction has been a passion since Taiichi Ohno began eliminating wasted motions on the shop floor. Often this led to removing a worker from a line or cell, to be placed in another job so one less worker had to be hired in the future. Toyota now has a rigorous “Total Budget Control System” in which monthly data is used to monitor the budgets of all the divisions down to the tiniest expenditure.
I asked many of the Toyota managers I interviewed if cost reduction is a priority and they just laughed. Their answers amounted to “You haven’t seen anything until you’ve experienced the cost-consciousness of Toyota—down to pennies.” Yet cost reduction is not the underlying principle that drives Toyota. For example, Toyota would no sooner fire its employees because of a temporary downturn in sales than most of us would put our sons and daughters out on the street because our stock investments went bad. Toyota executives understand their place in the history of the company. They are working within a long-term philosophical mission to bring the company to the next level. The company is like an organism nurturing itself, constantly protecting and growing its offspring, so that it can continue to grow and stay strong. In this day and age of cynicism about the ethics of corporate officers and the place of large capitalistic corporations in civilized society, the Toyota Way provides an alternative model of what happens when you align almost 250,000 people to a common purpose that is bigger than making money. Toyota’s starting point in business is to generate value for the customer, society, and the economy.